Microsoft 'dodged the Yahoo bullet'

Microsoft is unlikely to emerge as the loser after its failed bid for Yahoo, according to analysts.

Pundits believe that the Redmond giant may have avoided a potentially disastrous integration by giving up its pursuit of Yahoo.

"[Microsoft chief executive] Steve Ballmer unintentionally dodged a bullet today when the Yahoo/Microsoft deal collapsed," wrote Forrester Research chairman George Colony in a blog posting.

"Yahoo plus Microsoft would have been a disaster. The best and the brightest from Yahoo would have gone to Google, the culture clash would have been destructive, and it would have put Microsoft back in the sights of the regulators."

Instead of simply buying out a rival, Colony suggested that Microsoft would be better off reinventing itself to better compete with Google.

"Ballmer will have to reform the culture, the people, the company's speed, how it sees software, its design sense, its quality standards, its tired and annoying strategy of migrating customers through predictable software versions, and its old method of developing software (which produced the Vista flop)," he wrote.

Having staved off Microsoft, Yahoo is now faced with the task of justifying its actions to investors, according to Forrester Research analyst Charlene Li.

"Yahoo has been given a reprieve but it must explain and execute on a strategy that supports its belief that the company is worth US$37 a share, or face another round of acquisition attempts and shareholder revolt," she wrote.

"At the core, Yahoo has to convince advertisers that it still believes in its advertising platform, especially in light of the tests it was conducting with Google's search marketing platform."

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